Can't do grocery biz without being mindful of the way customers buy: Aadit Palicha

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The last special address at the recently-held Pitch CMO Summit was delivered by one of the youngest speakers at the event. Aadit Palicha, co-founder and CEO, Zepto, spoke of the company's growth and on the topic of the address - 'Revolutionising the way India buys groceries'.

Palicha opened the session with the idea of what they have built in the last few months. “And more importantly, how we look at the dynamics of the business and how we look at the dynamics of the customers we serve.”

He first described the trajectory that they have had at Zepto. “Eighteen months ago, Zepto was doing zero rupees in sales and zero orders a day. Today, we have become one of the fastest-growing Internet companies in Indian history. From zero sales in July 2021, we went to making thousands of crores in annual sales in 18 months! Right now, we have close to two million monthly transacting users. More importantly, we are doing it organically, driven through better customer experience – be it speed, expanding assortment or improving the quality of our fresh fruits and vegetables.”

Speaking on the philosophy behind that 18-month journey, he added, “When we look at the customer at Zepto and the way we have structured the business, effectively the way that we have designed our format and if you look at most online grocers have tried to design theirs, most players have built their business supply chain first.”

When you try to build a business in grocery without having any mindfulness of the way customers are buying groceries today, you end up having very limited penetration and, as a result, sub-optimal economics. He explained, “Today if you look at the thesis of building larger baskets to cover supply chain costs, which has been the predominant thesis in both offline and online groceries. What has ended up happening, as a result, if you look at the FMCG sector, is that there has been this gradual trend towards larger pack sizes and products. So, instead of, say, two or five kg packets, people are talking about 10 kg or 20 kg ones. And although that might seem like a benefit for the retailer and the customer, the reality is when you look at price-sensitive customers, they are not just concerned about the sticker prices of the products that they are buying but also deeply concerned about managing their own disposable cash flow.

Drawing a parallel to a local kirana (grocery) store and larger-retail players, Palicaha explained, “The kirana store is technically more expensive than bigger retailers yet it continues to garner such an overwhelming command of customers' grocery wallet share. It's because the proximity of the kirana store to your house versus the large-scale supermarket chain actually puts you in a position where you can manage your disposable cash flow a lot better because you do not have to invest in transport to a supermarket.”

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